Whirlpool says Iran war causing ‘recession-level industry decline.’ The shares are down 20%
Jacuzzi Shares fell on Thursday after the iconic device maker warned that the war in Iran was triggering a serious downturn; He underlined that high fuel prices and collapsing consumer confidence are starting to put pressure on big ticket purchases.
“The war in Iran led to recession-level industrial declines in the United States, with consumer confidence collapsing in late February and March,” the company said in its earnings release.
The comments marked one of the harshest corporate warnings yet about the economic consequences of the conflict and contrasted with more flexible spending trends recently emphasized by companies linked to travel and services.
Shares of Whirlpool, a maker of washers, dryers, dishwashers and other home appliances, fell a whopping 20 percent in premarket trading.
CEO Marc Bitzer said Whirlpool moved quickly to cut costs and adjust pricing as macroeconomic conditions worsened.
“We acted decisively on pricing and costs in the face of the rapid deterioration in macroeconomic conditions,” Bitzer said in a statement. he said. “Now, with Section 232 shifting in favor of domestic manufacturers, Whirlpool Corporation is structurally positioned to win with our American-made products.”
The company also roughly halved its full-year earnings forecast, lowering its forecast to a range of $3 to $3.50 per share from the previous outlook of about $6 per share. Whirlpool said it would also suspend its dividend as it prioritizes paying down its debt.
Analysts at JPMorgan said the lower earnings outlook was driven by higher raw material inflation, larger net tariff impact and weaker price and product mix benefits.
While companies like Uber and Disney report little evidence that consumers are giving up on travel, entertainment and convenience spending, comments from Maytag’s parent company suggest tensions may emerge in bigger ticket categories like washers, dryers and kitchen appliances.
Consumer confidence hit a record low in April as the Iran war drove up gasoline prices, according to a University of Michigan study. The stock market has rebounded since mid-April on hopes that the United States and Iran could reach a deal to end the war. But US oil prices are still above $90 a barrel as traders wait to see if a peace offer can be implemented.
